Tariff threats put outdoor industry on edge

Industry leaders say tariffs are not having the administration’s intended effect of encouraging new manufacturers to open up shop in the United States. Rather, the trade war is resulting in slimmer margins for companies and higher retail prices for American consumers.

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Tariffs are “existential threat,” especially for smaller companies, Outdoor Industry Associationvice president of membership and sales Matthew Kaplan said Tuesday during BizWest’s Outdoor Industry CEO Roundtable. “Some of the larger brands are going to be able to absorb it, but the smaller companies can’t just pass the cost on to their customers.”

Tariffs on imports hurt the outdoor industry because many products and product components are manufactured in China. Even if it were more profitable for American firms to make their products domestically, the manufacturing infrastructure simply doesn’t exist.

“I cant find anyone with the expertise” to manufacture certain types of goods, said James Samuel,president of Canaima Outdoors said. “We have no other options” then to outsource manufacturing to China.

Companies that pull out of China often open up shop in other parts of Asia rather than in the U.S., Alpine Bank executive vice president Gary Gomulinski said.

It’ would be one thing if the Trump administration were rolling out tariffs in a predictable or organized manner — the outdoor industry could prepare and adjust. Instead, the tariffs and the accompanying threats of additional levies on Chinese imports are being done in a haphazard manner, industry leaders say.

“You can react to the current problem but we have no way to plan for what’s coming next,” Scarpa finance manager Joe Higby said.

Trump has threatened to impose a new round of tariffs on $300 billion in Chinese imports after the Group of 20 summit to be held later this summer in Japan.

“The president is doing what he’s doing and everybody is along for the ride,” Kaplan said.

Previous threats to impose duties on Mexican imports have yet to come to fruition, but industry leaders aren’t ready to turn the page on that possibility down the line.

The tariffs “slow our development and our ability to invest in the communities where we operate,” ElevenPine president Jeff Curran said.

While companies have the option of passing additional costs along to consumers, that tactic is unlikely to be effective for smaller firms in the long term.

Wild price fluctuations can also erode consumer confidence and brand equity, he added.

Larger outdoor firms are often better equipped to weather a trade war.

A “25 percent [tariff] doesn’t mean the same thing to a small company than it does to the big players who have more diversified supply chains,” Trek Light Gear owner Seth Haber said.

The industry is taking steps to voice its opposition to tariffs, including lobbying lawmakers in Washington. However, Cusa Tea CEO Jim Lamanusa suggested companies might have more success appeal to customers who may not fully understand the impact of tariffs on their wallets.

“If consumers hear it enough, they can apply much more pressure than CEOs going to Capitol Hill,” he said.

In the past, Boulder companies in need of space would look to places such as Broomfield or Louisville. Those areas are now cost prohibitive as well.

“This is becoming more of a question of whether we can even stay in Colorado,” Haber said.

Employees, faced with ever-increasing home prices, are asking themselves the same questions.

Ben Tarr with Outside Analytics said his firm often finds more success recruiting talent from the Midwest.

Other labor conditions in the Boulder area are putting pressure on local employers in the outdoor space.

“With a low unemployment environment, how can you even attract people to work in manufacturing?” Backpackers Pantry president Rodney Smith asked rhetorically.

Colorado’s booming cannabis industry is attracting workers who otherwise might work in manufacturing jobs, he said.

Building a diverse workforce is often a particularly difficult challenge for outdoor companies.

It is “really frustrating not seeing women involved as CEOs and in boardrooms,” Alpine Start Foods CEO Alex Hanifin said.

Skratch Labs CEO Allen Lim said his company has “realized that building diversity is a very long process.” So Skratch has implemented internship programs that attract a diverse pool of candidates who could eventually become part of the company’s workforce.

While tariffs, workforce issues and real estate prices put pressure on Boulder firms, the area remains a hotbed for the outdoor industry.

“It’s still a very desirable place to be,” Kaplan said. “It lends some credibility to your brand to be located here.”

Industry leaders say tariffs are not having the administration’s intended effect of encouraging new manufacturers to open up shop in the United States. Rather, the trade war is resulting in slimmer margins for companies and higher retail prices for American consumers.

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Tariffs are “existential threat,” especially for smaller companies, Outdoor Industry Associationvice president of membership and sales Matthew Kaplan said Tuesday during BizWest’s Outdoor Industry CEO Roundtable. “Some of the larger brands are going to be able to absorb it, but the smaller companies can’t just…

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